NEGOTIATION

NEGOTIATION

1. In all areas of the biotechnology and pharmaceutical industriesThe licensing of intellectual property is in the most cases an important step

   • Because Negotiating IP licensing agreements and developing the terms of the business transaction involve evaluating numerous factors pertaining to the specific circumstances of the parties and the technology at issue
     • Preparing to negotiate
       • Effective preparation includes
         • Preparing a heads of agreement
         • Defining guidelines for the process
         • Assembling the right team
         • Negotiating honestly
         • Drafting the contract.
       • Classification
         • Initial Team Meeting. It is very important that the deal team meet and reach an understanding of the business motivation for the deal and the responsibilities and role of each team member during the process
           • for exampe spokesperson, technology review, business evaluation, record keeping).
         • The Team:In many negotiations both parties will have a deal team. The deal team will conduct due diligence and negotiate the licens
         • The term sheet: Typically covers the major issues in a potential deal in outline form,
           • Including: the licensed product or process; licensed territory; license fee and royalty; technical information and training required to develop and manufacture, sell and service the licensed product
         • Deadlines. Is important because it forces the other party to reveal its true intentions and interests in the licensing agreement.

2. The terms of a licensing contract reflect the allocation of risk between the parties of the potential future development and marketability of the patented technology.

   • Valuation approaches: Often uses one of three methods:
     • the cost method, the market method, and the income method. The value of the technology using the cost method is the cost of developing or purchasing the technology
   • Proprietary position_ is a factor that licensees can use to negotiate for smaller fees and royalties because large payment obligations
   • Developmental stage of invention: Patented inventions that are in the early stage of development
     • often require substantial investment and development before a commercially viable product is produced.
   • Payment terms: There are several forms of payment that licensing parties can negotiate to compensate the licensor for the patented technology.